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With reference to IAS 36, Impairment of Assets, a.Define a Cash generating units(CGU) and  explain the purpose of an impairment test b)Allocate impairment loss between the assets of CGU and pass the journal to record the impairment loss

With reference to IAS 36, Impairment of Assets, a.Define a Cash generating units(CGU) and  explain the purpose of an impairment test b)Allocate impairment loss between the assets of CGU and pass the journal to record the impairment loss

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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With reference to IAS 36, Impairment of Assets,

a.Define a Cash generating units(CGU) and  explain the purpose of an impairment test

b)Allocate impairment loss between the assets of CGU and pass the journal to record the impairment loss

Roasters Plc has determined that its organic coffee division is a cash-generating unit (CGU). The carrying amounts of the assets at 31 March 2021 are as follows: Factory Land Equipment Inventory 210,000 150,000 120,000 60,000 The division is reviewed for impairment due to the existence of indicators and the recoverable amount is estimated at £510,000. Inventory is considered to be included at the recoverable amount.
Transcribed Image Text:Roasters Plc has determined that its organic coffee division is a cash-generating unit (CGU). The carrying amounts of the assets at 31 March 2021 are as follows: Factory Land Equipment Inventory 210,000 150,000 120,000 60,000 The division is reviewed for impairment due to the existence of indicators and the recoverable amount is estimated at £510,000. Inventory is considered to be included at the recoverable amount.
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